Markets hate taxes.
Last week the Japanese consumption tax hike went into effect and for a few days it was business as usual. Then the wheels came off. This week, the Japanese Nikkei fell 7.3% in the worst weekly decline in three years. The February lows broke with barely a fight.
I don’t need to tell the technical analysts here what this pattern is:
Japanese Nikkei 225 daily
And I don’t have to remind anyone how tight the correlation between the Nikkei and USD/JPY has grown this year.
